Pursue, credit, property, customer, payment, government, bank, principal, investment, marketplace, responsive, savings, competitive, debt, security

While many people believe that … play only a narrow role in the economy—taking deposits and making loans—the modern bank has had to adopt new roles in order to remain … and … to public needs. Banking's … roles today are as follows:

The intermediation role   The payments role     The guarantor role   The agency role     The policy role Transforming .. received primarily from households into credit (loans) for business firms and others to make … in new buildings, equipment, and other capital goods. Carrying out … for goods and services on behalf of their … (such as by issuing and clearing checks, wiring funds, dispensing currency and coin, etc.). Standing behind their customers to pay off customer … when those customers are unable to pay (such as by issuing letters of credit to support international trade and to back customer issues of commercial paper), which makes it both easier and cheaper for a bank's customers to obtain … elsewhere in the financial … . Acting on behalf of customers to manage and protect their … or issue and redeem a customer's … (usually provided through the bank's trust department). Serving as a conduit for … policy in attempting to regulate the growth of the economy and … social goals.

Ex.10. Insert prepositions.

How and Why Banks Create Money When They Make Loans

All modern banks create money … one form or another. Exactly how does this occur?

First, we must remind ourselves what money is. Money is simply a medium … exchange—an object that is readily accepted … sellers in payment … the goods and services they offer. In most industrialized economies checks are still the principal means of paying … goods and services. In the United States, for example, checks account … more than four-fifths of the dollar value … all payments made annually … the economy.

When and how do banks create checkbook forms of money? It happens … two ways. First, when a customer is granted a loan, he or she will sign a promissory note and receive, … turn, a bank's demand deposit (checking account). The customer's promissory note is not money—it cannot be used to buy goods and services. But a bank's demand deposit is money and can readily be spent almost anywhere. Thus, … granting loans, banks create money simply … creating a spendable deposit … the name of the borrower.

Second, the entire system of banks also creates money as the deposits generated … lending flow … bank … bank. … law, each bank must set aside only a fractional reserve … each deposit received. Thus, every deposit received by a bank generates additional funds … and … the small required reserve that can be loaned … . As customers spend their loan money these funds flow … to other banks, giving them deposits to loan as well. Ultimately, a multiple amount of deposit money comes … existence … bank lending.

… each dollar loaned … a bank in the financial system, multiple deposits and multiple loans will be created eventually. The banking system's capacity to create money is one reason banks are regulated.

Read the above text once again and answer the following question: How and why do banks create money when they make loans?

Ex. 11.Open the brackets.

Globalization of Banking.

The rapid geographic expansion and con­solidation of banking units (to reach) well beyond the boundaries of a single nation (to encompass) the entire globe. Today the largest banks in the world (to compete) with each other for business on every continent. In recent years Japanese banks, (to lead) by Dia-Ichi Kangyo Bank and Fuji Bank, (to grow) much faster than most of their competitors worldwide due to the strength of the Japanese economy. Huge banks (to headquarter) in France (led by Caisse Nationale de Credit Agricole), West Germany (paced by the Deutsche Bank), and Great Britain (led by National West­minster Bank) also (to become) heavyweight competitors in the global market for corporate and government loans. Deregulation (to help) all of these institutions (to compete) more effectively with U.S. banks. More­over, these leading international banks (to score) sharp gains in global market shares, along with growing shares of the domestic U.S. market.

1. What is meant by “globalization of banking”?

Ex.12. Carefully explain the meaning of the following terms.

Bank account; bank advance; bank bill; bank card; bank certificate; bank charges; bank draft; bank guarantee; bank holiday; bank loan; banknote; bank rate; bankable; banker’s cheque; banking.

Ex. 13. Give 2-3 sentences of your own, using each word given below, to show that you understand the difference in the shades of their meanings.

Defend, protect, secure, insure, ensure, guarantee.

Ex. 14. Join the halves. Translate the sentences into Russian.

1. Many savers lack the financial expertise

2. Banks are closely watched because

3. Cameras and guards patrol banks

4. Banks are regulated because they provide

5. Fed services are available on the same terms

6. Banks are a source of jobs and satisfying

7. Credit analyst and loan offices need professional training in

8. Branch managers must know how to manage and motivate people

9. Regulation acts as a safeguard against such losses

10. All banks charted by the Controller of the Currency are

11. Consumers also receive help in managing their property

12. Personal bankers must have excellent interpersonal skills

13. Discrimination in the granting of credit would represent a significant obstacle

a) by providing deposit insurance and by periodically examining bank policies.

b) individuals and institutions with loans which support consumption and investment spending.

c) to personal well-being and an improved standard of living.

d) to other depository institutions keeping reserve deposits at the Fed.

e) and in-depth knowledge of the bank’s menu of services.

f) and in building an estate for retirement or other purposes.

g) and how to represent the bank well in the local community.

h) and depth of information to correctly evaluate the riskness of a bank.

i) of their power to create money in the form of readily spendable deposits.

j) designated member banks.

k) accounting, financial statement analysis, and business finance.

l) professional careers for millions of people.

m) lobbies to reduce the risk of loss due to theft.

Ex. 15. Match each job title on the left with the correct definition on the right.

1. tax inspector 2. tax consultant 3. bank manager 4. commodity trader 5. accountant 6. finance director 7. market analyst 8. financial advisor 9. insurance broker 10. stockbroker a) The person who is responsible for an individual bank. b) Someone who advises people on how to manage their financial affairs. c) Someone who prepares an individual’s (or company’s) tax return. d) The person who is responsible for the financial side of running business. e) A government official who checks that you are paying enough tax. f) The person who finds you the best insurance policy at the best price. g) Someone who buys and sells stocks and shares for clients, and charges a commission. h) Someone who comments on business and share prices in a particular sector of the economy. i) Someone who buys and sells things in large quantities, especially food products such as tea, coffee, cereals, and other raw materials.

Ex.16. Read the following text. Define the key-words of each paragraph. Put them down. Exchange the notes with your partner and retell the text using the key-words.

The Paris Club

Debt rescheduling is a form of debt reorganization in which debtors and creditors negotiate to defer payments of a principal and interest falling due in a specified interval for repayment on a new schedule. Some countries find it almost impossible to service their external debts. Recently. Rescheduling external debts has become a widely accepted practice. Debt rescheduling occurs at the Paris club for government and private debt owed to official creditors and at the London Club for debt owed to commercial creditors.

The Paris Club is an informal forum where countries experiencing difficulties in paying their debts to governments and private institutions meet with their creditors to restructure these debts. The name might be quite misleading because in reality the Paris Club is not a club, nor is it a formal international organization. It has no offices, no secretariat, and above all, no charter. The Paris Club is an ad hoc institution with no legal status.

In part, the Paris Club’s confidentiality policy has prevented it from becoming known to a wider public. Creditors refrain from releasing any information pertaining to their assessment of a given debtor’s economic and financial situation or to the scope of debt relief granted. The onset of the international debt crisis in the early 1980s, however, brought public attention to the Paris Club and to its contribution to resolving the balance-of-payment disequilibria experienced by a growing number of developing countries and by some Central and Eastern European countries.

Over the years, the Paris Club has become a key instrument in implementing the international debt strategy. This strategy rests on two main pillars: internal reform and structural adjustment, supplemented by external financial assistance in the form of fresh money and debt relief. Despite the public’s recent discovery of the Paris Club, this forum has existed since 1956, when Argentina agreed to meet in Paris with official creditors to find a mutually acceptable basis for rescheduling payments due on officially supported export credits. In the late 1950’s and 1960’s, Brazil, Chile, and Turkey sought similar Paris Club reschedulings. Since 1980, 54 countries have rescheduled the total of 186 debt agreements.

Ex. 17. Put the paragraphs into logical order. Read the text and answer the questions.

Money Laundering

One popular money-laundering practice is to make hundreds of small deposits to avoid having large deposits reported to law-enforce­ment agencies. Another alternative is to mix illegal deposits with legal ones, channeling illegally earned money through legitimate businesses that use banks for processing large amounts of legally earned deposits. A restaurant that does not accept credit cards, for example, deposits a large amount of cash each day in banks. These transfers can then serve as a cover for deposits of illicit funds.

The key to any money laundering scheme is to get the money into legitimate bank accounts without alerting law-enforcement officials to the money's illicit past. Once the money is in a legitimate account, it can be transferred around the world without interference from the authorities.

The currency of choice for most drug-related and other illegal transactions is the U.S. dollar. This partly explains why more than half of the U.S. greenbacks printed cannot be found anywhere in the American economy. Drug lords in the Far East, underground traders in Eastern Europe, and black market currency dealers in Latin America all make use of the U.S. dollar for their illegal activities.

The world’s criminals need to periodically recycle their "dirty money" so that it can be used in the economy at large without anyone knowing about its illegal past. A money laundering scheme is the process that turns large sums of illegally earned funds into "respectable" money. A drug dealer, for example, may end a day's work with a large amount of cash that needs to be deposited or otherwise spent. Since there is a limit to the number of luxury automobiles and condominiums a drug dealer can effectively use or buy without creating suspicion, illicit earnings need to be put into a bank, to be available for future use.

The U.S. dollar, mainly twenty- and hundred-dollar bills, came into use as an underground currency because of its liquidity: it can be exchanged almost anywhere in the world without raising suspicion. Because of the size and stability of the U.S. economy, the U.S. dollar has become the preferred currency for most players in the underground economies of the world.

International bank transfers are just electronic messages, from one bank to another, that instruct banks to put money from one account into another. The sheer size of these international computerized trans­fers, often exceeding $1 trillion per day, makes them difficult to con­trol. The illegal transfers disappear in a sea of legal ones.

1. What is the key to any money laundering?

2. What popular money-laundering practice is described in the text?

3. What is the currency of choice for most illegal transactions?

Ex. 18. Translate the following text into Russian.

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